Regulatory Alerts2014-11-21 | TED/FEM/FPC/GEN/01/025Sale of Foreign Exchange without adequate documentation particularly shipping documents
The Trade and Exchange Department has observed that some authorized dealers have been selling foreign exchange for items without the necessary shipping documents, especially on an open account basis. To address this issue, the department emphasizes that only imports supported by evidence of shipment and relevant documents are eligible for foreign exchange, including transactions with cash-backed letters of credit or matured clean lines or bills for collection. As a result, "Front Loading" purchases of foreign exchange in both RDAS and Interbank will no longer be permitted, and any violations will be sanctioned.
4237809 TRADE AND EXCHANGE DEPARTMENT E-mail address: ted@cenbank.org TED/FEM/FPC/GEN/01/025 November 21, 2014 TO: ALL AUTHORIZED DEALERS AND THE GENERAL PUBLIC SALES OF FOREIGN EXCHANGE WITHOUT ADEQUATE DOCUMENTATION - RE: PARTICULARLY SHIPPING DOCUMENTS This is to inform all Authorized Dealers and the General Public that we have observed that some Authorised Dealers have been indulging in the sale of foreign exchange for items which are not supported with necessary shipping documents, particularly on open account basis.
It is therefore important to note that only imports which are backed with evidence of shipment and other relevant documents are eligible for foreign exchange. For the avoidance of doubt, only transactions for which Letters of Credit are cash backed, or with matured Clean Lines or matured Bills for Collection are eligible for purchase of foreign exchange in the forex market.
For the sake of emphasis, "Front Loading" purchase of foreign exchange in both RDAS and Interbank shall no longer be permitted with effect from the date of the circular. Any infraction whatsoever of these requirements, by any Authorised Dealer, shall be appropriately sanctioned Please ensure strict compliance.
OLAKANMI. I. GBADAMOSI DIRECTOR TRADE & EXCHANGE DEPARTMENT